Some of you might be sitting there scratching your head on what do I mean by brokering my first sneaker collection…You’re probably thinking…I think this guy meant consigning, right? Well Yes and NO! I’m sure most of you have seen a glimpse at some of the photos of shoes I’ve posted on my page about a client’s drop off recently. If you need any reminders, check out the pictures below. In the past few years, there have been traditionally 2 types of way for a seller to make money as a business – consignment Or straight buyouts. I tend to focus less on consignment because traditionally most clients want cash today instead of tomorrow and we usually transact via buyouts as a result. With the market changing ever so fast, I believe a third type of middleman service will soon be relevant…and that is Sneaker brokering – which in my opinion is a variation spin off of traditional consignment model.
Recently a client hit us up with a 160+ pair collection. He wanted a specific price on them and I did a quick quote and replied back that it’ll be a little tough with your expectation and that it highly depends on WHEN you need the cash. I obviously didn’t want to drop $50k on this deal today because it would hinder my buying for the next week or so. I said, if I was to liquidate them all TODAY based on today’s prices, you’re looking at about net $50,000 or so, however he wanted $55,000. I really wanted to help him out and discussed with him on when he needed the cash and found out that he would need the cash by May, which gives me about 2 months’ time to move them. Achieving the $55k mark shouldn’t be a problem if we had time to move and attaining the best price possible. Then I said how about this? Drop off the collection this week and I’ll try my best to get your target, but expect your final payout to be between $50-$55k with $50k being the baseline guarantee. I was more than confident to get him closer to his target given we have 2 months to do so.
How it works is pretty simple…All his shoes were brand new DS, which made things a lot easier. I would utilize both my channel along with StockX to move all the shoes depending which channel made the most sense and sometimes even eBay offers better final prices. Of course like anyone’s collection, not all the shoes are hyped shoes and of course we all our just interested in the hyped ones and not the GRs. He obviously had a ton of Jordan 1s, which made a lot of sense to sell on StockX because the sold prices were so good that I will never be able to find buyers that will pay that price even after factoring their fee. Vice versa, some shoes that sold well on my channel I would not sell on stockX and if I was able to sell on my own channel I would earn my own spread compared to a sale on StockX. At the end of the day, I had a target price and date to sell everything by and this makes brokering slightly different from consignment. Consignment you are fixated on how much you can earn for selling the shoes (8%-15% depending how much you charge). With brokering, you can technically earn more money than your traditional fixed consignment spread you charge. Let’s face it, when you have a full store of consignment items that are not your own items you’re not going to be highly motivated to move them. This is the typical principal-agent bias – you are more motivated to sell your own shit more than others. With brokering, you are much more motivated to sell and earn your spread because the higher the price, the more you make. Essentially you are sharing the risk with the end client compared to consignment where you have absolute no risk as a consignor. For example, he had a pair of DS Reverse Shattered Backboard 1s as part of the $50k quote in which we priced it at $775 CAD and after factoring all the fees and shipping the client will receive $$660 CAD. The $775 CAD price was quoted at the time on StockX as the highest bid at the time, but if you’re experienced on StockX you can be patient and play with the asking price. After couple days, I was able to successfully sell the pair for $935 CAD, which netted $812 that is $153 higher than my initial target. Yes, I need earn enough alpha to cover the $5,000 gap between the quoted and target, but my profit as a broker can be much higher than the standard fixed fee of 10%. One key thing to note, selling on StockX is not as easy as you may think. You actually have to be pay a lot of close attention to active bids that are close to your ask as it can be competitive if other sellers have similar asking prices. High bidders don’t show up often and sometimes you have to make the call of whether or not if I let this high bidder go, will another one come again.
Brokering in my opinion would be beneficial to those that are motivated in selling and have experience in selling in multiple channels, which also requires a lot of product knowledge of ALL types of shoes. Another way to look at it is if you do consignment and are scheduled to make 10% off the $55k collection, your profit is limited to only $5,500 and there would be no time frame of when you can actually move everything. Brokering gives you a specific target date and desired dollar amount and most importantly gives you more motive to work harder for a higher profit. Final price is not dictated today, but the final payout is. So if you are able to flip the shoes higher than your target, your final profit could be more than the fix fee you would earn from consignment. However, you could run the risk of making less than the 10% but if you do everything as planned and are active in all channels of selling, the chances are low. To me, this was a goal I wanted to see if I was able to achieve and so far I’m 2.5 weeks in and I’d say I’m doing pretty well and on track to making the client’s $55k target and making a spread on my work for moving the shoes at the same time. I guess I’ll make a blog on this as a follow up in May if anyone is interested…but if no one is…then I’ll keep to myself 😊
Just a few pairs from his collection…*atleast the ones that everyone cares about